Relative Analytica       

  Hedging with Precious Metals

The local price of a precious metal can be used to hedge local currency risk. In the interactive service below, the values are derived from our latest weekly risk model dated: 17 February, 2021



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Local currency:  



Ex-ante hedge ratios

A summary of the ex-ante hedge ratios.

Precious MetalCodeTotal RiskCurrencyTotal Cur RiskCorrelationRisk RatioHedge RatioHedged Cur RiskRisk Reduction
GoldXAU/USD14.065%USD4.561%-0.4340.324-0.1414.109%-9.914%
PalladiumXPD/USD19.844%USD4.561%-0.3120.230-0.0724.334%-4.985%
PlatinumXPT/USD34.449%USD4.561%-0.4230.132-0.0564.134%-9.365%
SilverXAG/USD23.972%USD4.561%-0.4770.190-0.0914.009%-12.114%
Notes: This table reports the total annualised risk (Total Risk) for the local price of each precious metal, the total annualised currency risk (Total Cur Risk) for the local currency, the correlation between the local price of each precious metal and the local currency, the ratio of the risk of the local currency to the risk of the local price of each precious metal (Risk Ratio), the hedge ratio, the local currency risk when hedged with the local price of each precious metal (Hedged Cur Risk) and the reduction in the local currency risk resulting from the hedge.